Forum Post: Occupy Wall Street Signals End of Utopia Economics

All the below (by Amotz Asa-El) at:

http://www.marketwatch.com/story/occupy-wall-street-signals-end-of-utopia-economics-2011-10-19?pagenumber=1

There was plenty of business logic in shifting labor-intensive plants from rich countries to poor ones where operational costs were less than one-fifth their costs in the rich world. And there was plenty of political logic in allowing this exportation of jobs so long as it did no social damage back home.

Now, times have changed. Rich countries, having already resolved to shrink labor immigration, are about to concede that the original western vision of commercial deregulation has been abused, and the only way to uphold it in the longer run is to temporarily and partially retreat from it.

The new Zeitgeist will announce its arrival when Europe formally retreats from its currency union. Everyone knows it is only a question of time before Greece effectively, and maybe also formally, leaves the euro zone. And when that happens, all will understand that the previous era’s spirit of commercial naivete and political generosity, which made strong economies trust weak economies only to ultimately be bamboozled by them, is over.

While American assembly lines flocked to China, manufacturing jobs back in America shrank by 30%. Indeed, this was also due to modernization, which allows larger production with fewer people, but first and foremost it was due to the migration of millions of jobs to China and other cheap-labor countries. And this job exportation regulators can offset.

China, like Greece, abused the economic era of good feeling. The Greeks doctored macroeconomic statistics to enter the euro zone, and they borrowed beyond their means, assuming that the strong economies they cheated in the morning would bail them out in the evening.

Similarly, China effectively sapped American jobs and benefited from America’s low tariffs, and at the same time imposed high tariffs on its own imports and undervalued its currency, thus further weighing on importers.